It’s easy to get traumatized reading much of the current business news…
- the Fed chairman saying that “recession is possible”;
- the head of the NBER – which officially identifies recessions (after the fact) – saying that a “severe” recession is likely;
- and grim news from the housing and financial sectors, almost daily.
Here’s something to keep in mind about recessions: by definition, they’re a departure from the norm …and hence temporary. One to three quarters, for most of them. That’s why it’s called a business cycle; it’s never a reason to realign your business to a new permanent reality, because that’s not what it is.
Here’s another curious fact: recessions happen, at least in part, because enough decision-makers come to believe that one is “definitely” on its way; and then their own belt-tightening actions (cutting spending & investment; “downsizing” workers, who then are unable to spend sufficiently) collectively ensure that one will happen.
How to lose in a recession.
It’s equally true that your B2B can literally have its own “recession”, even if the rest of the economy doesn’t …all you have to do is cut back enough on the activities that bring prospective customers to look at your products and talk to your salespeople. It’s an absolute guarantee that such actions will cause a drop in revenue. And if any of your competitors don’t do likewise, you’ll also lose market share …which is always very difficult to gain back.
Another good way – although it takes longer – is to cut R&D too deeply. This is likely to cause your product set to become old and tired, just when industry buying picks up and you want it to be at its freshest and most irresistible.
How to survive – maybe even prosper – despite a recession.
The best companies refuse to shoot themselves like this. G. Michael Maddock and Raphael Louis Vitón’s powerful BusinessWeek.com piece, “The Upside of Recession”, highlights some strategies they tend to share…
Invest in your future stars, using the funds saved by pruning your dogs …which means avoiding the common – but losing – practice of spreading a flat-percentage cut around like peanut butter. To quote Maddock and Viton: “Great companies and great executives don’t abandon their growth strategies in light of temporary setbacks. They attack aggressively, while everyone else is pulling back.”
Don’t decelerate efforts to find and win buyers: they’ll be harder to find, they’ll do more research and take longer to decide, but buyers are still out there. Says Harvard Business School professor John A. Quelch, “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”
Of course, your Web marketing consultants stand ready to evaluate your online marketing program and help you best capitalize on the unique opportunities presented by a challenging economy.
